Thursday, 3 February 2005

Ceisteanna (208, 209, 210)

Richard Bruton

Ceist:

208 Mr. Bruton asked the Minister for the Environment, Heritage and Local Government the income threshold for qualification for a rent subsidy under shared ownership and the subsidy awarded when the scheme was first introduced; and the percentage by which the subsidy and the thresholds have increased since that date. [3194/05]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Minister for the Environment, Heritage and Local Government)

When the shared ownership scheme was introduced in May 1991, the rental subsidy rate ranged from a minimum of £300, €381, to a maximum of £700, €889, where gross income in the previous tax year was at or below £10,000, €12,700. The current rates range from a minimum of €1,300 to a maximum of €2,550, which represent increases of 241% and 187%, respectively, on the original values. The qualifying income threshold is now €25,500, an increase of 101% over 1991.

Richard Bruton

Ceist:

209 Mr. Bruton asked the Minister for the Environment, Heritage and Local Government if the 4.3% of the market value used to decide the rental payment under shared ownership and the annual indexation of this value by 4.5% per annum, is now out of line with the rent ratios and rate of increase in rents which apply in the private rented sector; and his views on whether persons undertaking shared ownership schemes should at lease have ratios applied that are no worse than in the private sector and, in view of their housing needs, should have access to better terms; and if he will make a statement on the matter. [3195/05]

Amharc ar fhreagra

Under the shared ownership scheme houses are acquired by a local authority and leased to the shared owner, who purchases at least 40% of the value of the house and rents the remaining equity from the local authority. The local authority finances the transaction by borrowing from the Housing Finance Agency. The shared owner must purchase full ownership within 30 years.

For transactions commenced on or after 1 January 2003, the annual rent is calculated at 4.3% of the value of the local authority equity and the rent is increased by a fixed 4.5% on 1 July each year. The rent is used to repay the cost of the local authority equity to the Housing Finance Agency and, depending on the level of mortgage interest rates obtaining, may also increase or decrease the capital outstanding on the local authority share at the end of each year. These arrangements represent a significant improvement on the previous terms of the scheme for the shared owner.

The rental formula applied under the scheme is not comparable to rents in the private rented sector, which are determined by the operation of the market. Therefore, movements in private sector rent levels would have no relevant bearing on the calculation of the rental element under shared ownership. The terms of the shared ownership scheme are kept under review by my Department.

Richard Bruton

Ceist:

210 Mr. Bruton asked the Minister for the Environment, Heritage and Local Government if he has satisfied himself that the cost for a person on shared ownership of converting to a 100% loan is creating a disincentive for persons to move as quickly as possible to a standard mortgage; and if he will consider initiatives to reduce the cost of such a conversion which is now €650; and if he will make a statement on the matter. [3196/05]

Amharc ar fhreagra

The shared ownership scheme is one of a number of schemes designed to facilitate those on low to modest incomes to purchase their first home. The objective of the scheme is to enable households that would not otherwise qualify for a mortgage to purchase a house outright to buy a share in a house now and the remainder at later stages within a 25 year period.

The scheme is administered by the local authorities in accordance with general terms and conditions set down by my Department. The cost of conversion to a 100% loan includes legal fees and administrative costs arising from the transfer of rental equity to mortgage equity. The exact cost is a matter between the local authority and the customer.

My Department will continue to support the shared ownership scheme as an important instrument in support of affordable housing and monitor and review the terms of the scheme where this is considered necessary.